Swiss Re Leading Global Re/InsurerSwiss Re Group | Company presentation | April 2020 We monetise our...
Transcript of Swiss Re Leading Global Re/InsurerSwiss Re Group | Company presentation | April 2020 We monetise our...
Swiss Re – Leading Global Re/InsurerCompany presentation as of April 2020
Swiss Re Group | Company presentation | April 2020
Swiss Re – Leading Global Re/Insurer
2
Capital Management
page 19
P&C and L&H Reinsurance
page 28
Corporate Solutionspage 40
Overview and Group Strategy
page 4
Life Capitalpage 47
Asset Management
page 53
Global Re/Insurance & Protection Gap
page 61
Swiss Re Group | Company presentation | April 2020 3
Group financial targets
over-the-cycle
A truly global reinsurer1…
…strongly diversified2
1 2019 net premiums earned by region, incl. fee income 3 10-year outlook: 5% for P&C reinsurance and 4% for L&H reinsurance; source: Swiss Re Institute 2019 5 92% of credit bonds are investment grade rated 7 Economic Net Worth 2 2019 Economic Net Worth by segment, excl. Group items 4 As of 1/2020 6 Average 2015-2020
47%
31%
22%
EMEAAmericas Asia
32%
48%
7%
13%
Life Capital
P&C Re Corporate Solutions
L&H Re
RoE ≥ risk free
+700bps
ENW7 per share growth
+10% p.a.
Profitable long-term growth opportunities • Reinsurance market growth of 4-5%3 p.a.
• No 1 reinsurer in High Growth Markets
• Life Capital open book 2015-19 GPW CAGR of 30%
• Corporate Solutions focusing on restoring profitability
Financial strength and defensive profile • Group SST ratio of 232%4, well above target level of 220%
• Capital strength remains resilient to market movements
• AA- S&P credit rating, A.M. Best A+
• Strong diversification benefit
• Low investment risk5
Sector-leading capital management • Net solvency capital generation of USD 1.8bn6
• Capital repatriation CAGR of 10% over 2012-2019
• Disciplined M&A strategy and organic deployment
• Share buybacks of USD 4.1bn executed since FY 2015
Swiss Re Group | Company presentation | September 2018
Financial highlights
4
Overview and Group Strategy
Swiss Re Group | Company presentation | April 2020
Swiss Re Group at a glance
Commercial insurance arm of the Group and provides risk transfer solutions to large and mid-sized corporations around the world
Offers traditional reinsurance products, insurance-based capital market instruments and risk management services globally through two segments – Property & Casualty and Life & Health
Manages life and health insurance books, providing alternative access to the life and health risk pool, helping to generate stable returns
1 As of 1/20202 As of 8 April 2020
Reinsurance Corporate Solutions Life Capital
Swiss Re is a leading and highly diversified global re/insurer, founded in Zurich (Switzerland) in 1863
• Swiss Re Group’s Swiss Solvency Test Ratio for 2020 is 232%1
• Financial strength2 of the Swiss Re Group is currently rated: Standard & Poor’s: AA- (stable); Moody’s Aa3 (stable); A.M. Best: A+ (stable)
• AAA sustainability rating from MSCI (July 2019)
5
Swiss Re Group | Company presentation | April 2020
Based on three differentiation drivers, we have built leading insurance businesses
6
Reinsurance Corporate Solutions Life Capital
Foundation of our strength with increasing earnings power
Returning to profitability and focused on competitive advantages
Transitioning to a digital B2B2C player
Client Access
RiskKnowledge
CapitalStrength
Swiss Re Group | Company presentation | April 2020
Our client access capabilities are unique
7
We maintain strong direct relationships with our reinsurance clients…
Client employees
Swiss Re employees
APAC
Americas
EMEA
of premiums from non-intermediated business
P&C Re
>50%L&H Re
>90%
…while also partnering with non-insurance players for innovative B2C insurance propositions
Swiss Re is a trusted partner for insurance and non-insurance companies
Partner industriesSwiss Re units
Corporate Solutions
Reinsurance
Life Capital
...
OEM
Real estate
Technology
Finance
...
Others
Current discussions with
>100 non-insurance partners
Illustrative – Partnership portfolioIllustrative – Global client
Swiss Re Group | Company presentation | April 2020
We operate a truly global and diversified Group
8
Premiums per country1
USD 0
>175 million family members supported
through L&H Re
>150countries
Swiss Re’s global access to risks and diversified earnings generation is exceptional in the insurance industry
USD >3bn
«We make the world more resilient»
Americas EMEA Asia
>100 000P&C clients supported
EVM1
US GAAP2
USD 22bnUSD 18bn
USD 21bnUSD 12bn
USD 14bnUSD 8bn
Premiums
1 EVM premiums and fees, FY 20192 US GAAP net premiums earned (including fee income from policyholders), FY 2019
Swiss Re Group | Company presentation | April 2020 9
2019 reported Group net income
USD 727m
US casualty impact on P&C Reinsurance
Proactive measures to address ongoing US casualty market
trends
Corporate Solutions turnaround
Decisive management actions and pronounced increase in
US casualty claims
Elevatednat cat losses
Multiple nat cat events and late reported losses on
Typhoon Jebi
Excellent investment result
Strong equity and fixed income performance and SulAmérica divestment
Main elements driving the Group’s 2019 results
Swiss Re Group | Company presentation | April 2020
Swiss Re’s strong economic earnings track record 2015-2019
10
Total contribution to ENW forms the basis for Swiss Re’s attractive capital management actions
EVM profit new business
EVM profit previous years’ business
EVM profit investments
EVM profitEconomic value is created if total economic return generated for shareholders is aboveexpected total return for taking risk (capital costs)
Capital cost release, debt costs and taxIncludes base cost of capital(risk-free return and market risk premium) and frictional capital costs
Total contribution to ENW
Represents total economic return generated for shareholders
(economic earnings) and is the key element of gross excess capital
generation
USD 419mavg. 2015 -2019
USD -582mavg. 2015 -2019
USD 396mavg. 2015 -2019
USD 232mavg. 2015 -2019
USD 2 742mavg. 2015 -2019
USD 2 974mavg. 2015 -2019
Swiss Re Group | Company presentation | April 2020 11
ENW per share growth vs. total shareholder return1
2
EVM results represent the market relevant information aligned with total return to shareholders
1 Reflects share price development and dividends paid in USD; indexed at year-end 2005 and shown on a cumulative basis to 28 February 20202 Calculated as: (current-year closing ENW per share + current-year dividends per share) / (prior-year closing ENW per share + current-year opening balance sheet adjustments per share); shown on a cumulative basis and indexed
from 31 December 2005
ENW per share vs. share price development
Total shareholder returnENW per share growth2
70
80
90
100
110
120
130
Swiss Re share price (CHF) ENW per share (CHF)
0%
50%
100%
150%
200%
250%
300%
2005 2007 2009 2011 2013 2015 2017 201970
80
90
100
110
120
130
2013 2014 2015 2016 2017 2018 2019
Swiss Re’s total shareholder return is best tracked by ENW developments
Swiss Re Group | Company presentation | April 2020
Swiss Re’s capital repatriation remains peer-leading
Dividends and share buyback per share (CHF, CAGR in %)
1
1 In light of the current volatility in the financial markets and global economic situation precipitated by the COVID-19 pandemic, at its post-AGM meeting the Board of Directors concluded that the proposed share buyback programme for 2020 will not be launched. The 0.60 CHF per share for 2020 reflects the last portion of the 2019/2020 share buyback completed in February 2020
Swiss Re maintained its very strong capital position and is well positioned to respond to market opportunities while continuing to focus on its capital management priorities
12
3.00
3.50 3.85 4.25 4.60 4.85 5.005.60 5.90
4.004.15
4.40 3.303.40
4.20 3.10
0.60
20172014
8.00
2012 20152013 20182016 2019 2020
8.258.70
7.50
8.65
7.90
9.20
6.50
+10%
Ordinary dividends Special dividends and share repurchases
1
Swiss Re Group | Company presentation | April 2020
Value creation with increasing book value and paid dividends
Book value per share and accumulated paid dividends (CHF, CAGR in %)
87.76 82.76
101.12 96.04107.64 103.37
91.72 97.46
10.50
18.50 25.75
30.35 35.20
40.20
45.80
3.00
2012 201820162013 2014 20172015 2019
90.76 93.26
119.62 121.79
137.99 138.57131.92
143.26+7%
Accumulated paid dividendsBook value per share
13
Swiss Re Group | Company presentation | April 2020
We monetise our R&D capabilities, cementing Swiss Re as the leading knowledge company
14
Market intelligence
R&D value driver framework Strategic focus areas
450 R&D FTEs
13R&D teams
80R&D programmes
Business steering
Capitalallocation
Commer-cialisation
Risk selectionand pricing
Efficiency
Project examples
Advance Nat Cat risk view Chinese cancer research
Insurance markets and cycle analysis Macroeconomic R&D
MagnumLife Guide
Nat Cat pricing toolsRisk engineering services
Analytics for contract wordingGroup data integration
Insurance beta
Insurance alpha
Data, solutions, publications
Process re-engineering
Swiss Re Group | Company presentation | April 2020
Swiss Re’s tech strategy is embedded in our business strategy and ensures effective innovation management
15
1 2
34
OUR CLIENTS OURSELVES
OUR EXPOSUREOUR DATA
Swiss Re tech
strategy
Increase our clients’ competitiveness
Apply tech to improve our own value chain
Harvest the full potential of our proprietary data
Get closer to risk through digital platforms
Clear and pragmatic business objectives
iptiQ state-of-the-art digital B2B2C business; largest investment representing ~50% of total spend
USD ~300mtotal investments p.a. in key tech projects
Our tech strategy is implemented with a combination of in-house developments and strategic partnerships
ATLAS new general ledger allowing closing within 5 days; co-innovation project with SAP (SAP FPSL1)
Automotive and mobility solutionspartnerships with car manufacturers for insurance product co-development (e.g. ADAS risk score with BMW)
Selected examples:
1 FPSL = Financial Product Sub-Ledger
Swiss Re Group | Company presentation | April 2020 16
Swiss Re outperforms its peers with higher margins
Peer-leading margins
US GAAP net operating margins average 2012-19
11% 7%
Swiss Re Group Main competitors¹
¹ Based on weighted average of Munich Re, Hannover Re, SCOR and RGA
UnderwritingInvestment Operating expenses
• Differentiation approach has enabled Swiss Re to generate higher margins and outperform
• Swiss Re outperformed peers on average by 5%pts since 2012, mainly driven by its superior underwriting performance (risk selection, capital allocation and differentiation)
Swiss Re is leading insurance business that represents a highly rewarding opportunity for shareholders
Swiss Re Group | Company presentation | April 2020
We are committed to our over-the-cycle Group financial targets
17
Group targets over-the-cycle
13.7%
10.5%
13.7%
10.6%
10
0
14
4
2
12
6
8
2013 2014 2015 2016 2017 2018 2019 Over-the-cycle
target
11.0% 10.8%
0
5
10
20
2013 20152014
17.0%
2016 2017 2018 2019 Over-the-cycle
target
10%
1 700 bps above 10y US Govt. bonds. Management to monitor a basket of rates reflecting Swiss Re’s business mix2 The 10% ENW per share growth target is calculated as: (current-year closing ENW per share + current-year dividends per share) / (prior-year closing ENW per share + current-year opening balance sheet adjustments per share)
Group ENW per share growth2Group return on equity
actual 700 bps above 10y US Govt. bonds
Rf + 700 bps1
9.4%
1.4%
9.4%9.2%9.6%9.4% 9.3%
2.5%
10%
actual target
10% 10% 10% 10% 10% 10%
1.0%
7.2%
5.4%
4.4%
8.2%
9.6%
Swiss Re Group | Company presentation | April 2020
Signing of
Shift of investment portfolio
to follow ESG investment benchmarks
Reduced providing re/insurance
to thermal coal
FormalSustainability Risk
Framework developed
Signing of
100% GHGneutral
Adopted FSB TCFD recommendations
Reduced investing in thermal
coal companies
Commitment to Commitments to UN
Climate Action Summit
Net-zero GHG
emissions in operations
Obtain 100% of power
from renewable sources
Net-zero GHG
emissions across entire
business
Stop providing re/insurance
to most carbon-intensive oil & gas production
First sustainability-related publication
2003
2007/08
2009
2012
2015 2017
20182016
2019 2023
2020 2030
2050
1979
18
Swiss Re has a long tradition in sustainability
Swiss Re Group | Company presentation | September 2018
Financial highlights
19
Capital Management
Swiss Re Group | Company presentation | April 2020
We remain focused on our capital management priorities
20
SST 19251%
SST 20232%
Group SST ratio
AA-/Aa3/A+
RatingPayout ratio
55%1
USD 8.1bnordinary dividend (FY 15 to FY 19)
AcquisitionsBusiness reinvestments
USD 4.1bn2
buybacks executed(FY 15 to FY 19)
ExtraordinaryPayout ratio 27%1
I II
IIIIVCapital management priorities
Swiss Re’s capital management priorities remain unchanged
I. Ensure superior capitalisation at all times and maximise financial flexibility
II. Grow the regular dividend with long-term earnings, and at a minimum maintain it
III. Deploy capital for business growth where it meets our strategy and profitability requirements
IV. Repatriate further excess capital to shareholders
1 Payout ratio calculated as capital repatriation over total contribution to ENW2 In light of the current volatility in the financial markets and global economic situation precipitated by the COVID-19 pandemic, at its post-AGM meeting the Board of Directors concluded that the proposed share buyback programme for 2020 will not be launched
Swiss Re Group | Company presentation | April 2020
SST ratio development
1 SST 220% target capitalisation was introduced in 20172 MVM = Market Value Margin = Minimum cost of holding capital after the one-year SST period until the end of a potential run-off period
21
• Group SST ratio remains very strong and above the target of 220%. The decrease reflects higher SST target capital and Market Value Margin (MVM2)
• Increase in SST available capital driven by strong investment contribution and higher supplementary capital, partly offset by capital distribution to shareholders
• Strong growth in insurance risk as well as lower interest rates increase SST economic target capital and MVM leading to the observed decrease in the ratio
• Increase in MVM year-on-year mainly driven by the impact of lower interest rates and business growth in Asia and the US
44.8 46.1 46.3
40.6 41.9
17.2 17.6 17.2 16.2 18.0
261% 262% 269%
251%
232%
0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2016 2017 2018 2019 1/2020
USD bn, %
SST available capital
SST economic target capital
Group SST ratio calculation
SST economic target capitalSST available capital
SST target capitalisation1
(220%)
SST risk-bearing capital - MVM
SST target capital - MVM=
USD 5.3bn MVM
USD 5.2bn MVM
USD 5.9bn MVM
USD 7.0bn MVM
USD 9.4bn MVM
Illustrative
Swiss Re maintains a very strong Group capital position, with Group SST ratio above target
Swiss Re Group | Company presentation | April 2020 22
Swiss Re’s capital strength resilient to market moves and insurance events
Financial market sensitivities Insurance stresses
1 Excluding the impact of earned premiums for business written and reinstatement premiums that could be triggered as a result of the event2 Based on 99.5% VaR annualised unexpected loss
215%
194%
206%
218%
210%
Resulting estimated Group SST ratio 1/2020
205% 215% 225% 235% 245%
Credit spreads (-50bps)
Interest rates (+50bps)
Equity markets (+25%)
Equity markets (-25%)
Interest rates (-50bps)
Credit spreads (+50bps)
Real estate values (-25%)
Real estate values (+25%)
235%
220%
242%
242%
224%
226%
238%
220% Group SST
target capitalisation
232% Group SST 1/2020
229%
Resulting estimated Group SST ratio 1/20201
220% Group SST
target capitalisation
232%Group SST 1/2020
1 in 200-year Atlantic hurricane
1 in 200-year Californian earthquake
1 in 200-year Pandemic
1 in 200-year European windstorm
1 in 200-year Japanese earthquake
(USD 6.4bn2)
(USD 4.4bn2)
(USD 3.1bn2)
(USD 2.4bn2)
(USD 3.7bn2)
Swiss Re Group | Company presentation | April 2020
Group SST ratio Group Solvency II equivalent
ratio
Average of reinsurance
peers Solvency II ratio
Average of insurance peers
Solvency II ratio
232%
>260%
238%
210%
Comparison of Group SST / Solvency II ratio1
1 Comparison was produced on a best effort basis, with Solvency II ratio estimate for Swiss Re not allowing for any long-term guarantee adjustments2 Average of Hannover Re, Munich Re, SCOR3 Average of Allianz, Aviva, AXA, Generali
1/2020 Year-end 2019
2 3
• SST and Solvency II are both comprehensive economic and risk-based solvency regimes
• Due to important differences, Solvency II equivalent ratio is higher for the Swiss Re Group
• The Group benefits from peer-leading diversification resulting in superior capital efficiency and attractive capital management actions
• Swiss Re has strong financial flexibility and is well positioned to respond to market shocks and growth opportunities
23
Swiss Re maintains a leading capital position in the re/insurance sector
Swiss Re Group | Company presentation | April 2020 24
1 SST available capital: includes change in other EVM items (including foreign exchange impacts on ENW) and change in SST valuation differences with EVM on a best effort basis; SST economic target capital: includes foreign exchange, interest rate and other impacts on Swiss Re’s economic target capital on a best effort basis
2 Includes the sum of paid dividends (2016-2020) and executed public share buybacks (2016-2019) as well as the authorised 2020 public share buyback (a pro-rata share of the originally proposed 2020 share buyback programme of CHF 0.8bn is used, however, in light of the current volatility in the financial markets and global economic situation precipitated by the COVID-19 pandemic, at its post-AGM meeting the Board of Directors concluded that the proposed share buyback programme for 2020 will not be launched)
• Solid economic earnings (USD 3.0bn on average) drove Swiss Re’s strong solvency capital generation over the last five years (USD 1.8bn net solvency capital generation on average per year or CHF 5 yearly average per share)
• The Group has deployed USD 7.7bn of capital over the past five years, mainly to insurance risk pools
• Swiss Re Group SST includes peer-leading capital repatriation of USD 13.6bn2 in total or USD 2.7bn2 per year
Swiss Re’s solvency capital generation – five year aggregated view from Group SST 2015 to 2020
Capital management14.9
8.8
-6.4
-7.7
Other items (incl. fx)1Economic earnings (Total contribution
to ENW)
1.6
Capital deployment (capital allocation)
Net solvency capital generation
-1.6
Change in supplementary capital
-13.6
Capital repatriation2 Change in excess capital
CHF 8CHF 5CHF 9yearly average
per share
Strong solvency capital generation over the last five years
Swiss Re Group | Company presentation | April 2020
15% 14%
24%
14%
37.236.0
25
Group available capital
USD bn• Significantly strengthened Group financial flexibility through
senior debt deleveraging, issuance of contingent capital and pre-funded subordinated debt facilities (not counting as SST supplementary capital or rating agency capital until drawn)
• Financial flexibility further enhanced with Alternative Capital Partners (ACP) by attracting third-party capital into selected risk pools to enable further growth
• Notional amount of funded subordinated debt increased in 2019 due to:
- Issuance by SRZ of EUR 750m and USD 1bn dated subordinated debt and USD 1bn perpetual fixed spread callable notes
- Issuance by ReAssure of GBP 1bn subordinated debt
- Redemption of SRZ’s GBP 500m perpetual subordinated debt and USD 750m perpetual subordinated notes with contingent write-off
• Notional amount of senior debt decreased due to senior debt maturities, repayment of a Life Capital senior bank loan and reduction in LOC usage
Additional USD 2.7bn pre-funded subordinated debt available on demand
6.5 6.9 6.7
7.0 5.23.1
6.75.5
2019
47.7
57.4
1.9
54.2
2013 2016
LOC1
Senior debt2
Subordinated leverage ratio5
Subordinated debt3
Core capital4
Senior leverage ratio616%
15% 16%
24%20%
10%
37.2 36.6 36.1
1 Drawn unsecured LOC and related instruments (2013 and 2016 shows drawn and undrawn)
2 Senior debt excluding non-recourse positions3 Funded subordinated debt and contingent capital instruments
(2016 also shows undrawn pre-funded facilities)
4 Core capital of Swiss Re Group is defined as economic net worth (ENW) as of year-end 2019
5 Funded subordinated debt divided by sum of funded subordinated debt and ENW (2016 also shows undrawn pre-funded facilities) (target: less than 20%)
6 Senior debt plus LOCs divided by total capital (target: less than 25%)
Swiss Re’s target capital structure and financial flexibility is supported by the Group’s strong funding platforms
Swiss Re Group | Company presentation | April 2020 26
USD bn
Capital repatriationGroup SST 2015-201,2
13.6
1 Incl. the sum of paid dividends (2016-2020) and executed public share buybacks (2016-2019) as well as the authorised 2020 public share buyback (a pro-rata share of the 2020 share buyback programme of CHF 0.8bn is used)2 In light of the current volatility in the financial markets and global economic situation precipitated by the COVID-19 pandemic, at its post-AGM meeting the Board of Directors concluded that the proposed share buyback programme for 2020 will not be launched
Swiss Re
Corporate Solutions Life CapitalL&H Reinsurance
Received capital contribution of USD 1.0bn in 2017 and
USD 0.6bn in 2019
Received capital contribution of USD 1.6bn in 2016
(Guardian) and USD 0.8bn in 2017-2019
Ordinary dividends
Per share in CHF
USD 8.1bn
4.854.60
Share buybacks USD 4.6bn
3.305.00 3.40 4.20
in year paid
P&C Reinsurance
2.52.0
1.3 1.4
2016 20192017 2018
0.4 0.7 0.7 0.3
201920172016 2018
0.3 0.2 0.1
2016 2017 2018 2019
0.0 0.41.1 1.1
0.5
2016 2017 2018 2019
1.1 1.1 1.3 0.90.2
20182016 2017 202022019
5.60 3.10
1.6 1.6 1.6 1.7 1.8
2016 20202017 2018 2019
5.90 0.60
Peer-leading capital repatriation
Swiss Re Group | Company presentation | April 2020
Increased Nat Cat risk exposure supported by more active use of hedging tools1
Breakdown of capital relief from various hedging tools
• ACP enables Swiss Re to recapture Nat Cat market share and to proactively manage risk exposure per peril
• The business we write offers attractive returns on capital for both ACP investors and Swiss Re shareholders
• Through risk sharing, Swiss Re earns a commission towards covering our operating expenses
• Hedging of TC North Atlantic enables the business to grow in other perils and therefore improve diversification of risk retained on our balance sheet
• Sidecar platform contributes the majority of the capital relief
We manage our net risk exposure by ceding excess risks to third-party capital investors
USD bn
1 As of July in each respective year
65%
5%
99% shortfall basis in 2019
0
5
10
15
2015 20162013 2014 2017
13%
2018
20%
2019
99% shortfall net of retro
99% shortfall relief
Capital relief as a % of shortfall gross of retro
10%
20%
Sidecar platform
Other
Cat bonds + ILW
Retro 65%
5%
Alternative Capital Partners (ACP) allows Swiss Re to grow our nat cat portfolio in a risk controlled manner
27
Swiss Re Group | Company presentation | September 2018
Financial highlights
28
P&C and L&H Reinsurance
Swiss Re Group | Company presentation | April 2020 29
Differentiation is at the heart of Swiss Re’s Reinsurance franchise
Client Access
RiskKnowledge
CapitalStrength
We leverage our key assets
Our client relationships have been built over time, with strong C-suite
access
We dedicate resources to generating actionable insights
which we use and share with clients
Capacity is important to our clients and helps us gain access to
exclusive deals
Swiss Re Group | Company presentation | April 2020
0%
2%
4%
6%
8%
10%
12%
14%
16%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Swiss ReReinsurance3
In recent years, both Reinsurance segments have performed in line with their ROE targets
• P&C Re’s average performanceremains strong despite significant recent Nat Cat activity
• L&H Re delivers peer-leading ROEs underpinned by underwriting rather than investment returns
Avg. dividend flows4 as % of equity, 2015-2019
Avg. ROE, 2015-20192
bubble size = cumulative net income, 2015-2019, (calculations in USD)
Our financial performance reflects our market-leading capabilities
30
Reinsurance delivers a market-leading1 combination of shareholder returns and capital repatriation
1 Peer group includes Alleghany, Everest Re, Hannover Re, Munich Re Reinsurance, Partner Re, Renaissance Re, RGA, SCOR2 Annualised 9M 2019 YTD actuals 3 Dividend flow for Swiss Re Reinsurance reflects dividends paid by the Reinsurance Business Unit to Swiss Re Group4 Dividend flows include ordinary dividends paid to shareholders as well as special dividends and share buybacks
Swiss Re Group | Company presentation | April 2020
However, the market is changing and we are taking actionR
ein
sura
nce
ca
pit
al i
n U
SD
bn
Inte
rest
ra
te in
%31
Global trad. reinsurance capital (LHS) Alternative capital (LHS)
We seek to grow and maintain our market-leading position in the face of evolving industry conditions
US 10Y interest rate (RHS)
Reinsurance industry development1 and interest rate evolution
1 Source: Swiss Re Institute2 Swiss Re pricing index; indicative for 2019
0%
1%
2%
3%
4%
5%
6%
7%
0
100
200
300
400
1994 1998 2002 2006 2010 2014 2018
Inte
rest
ra
te in
%
Worldwide Cat Market Price Index2
Future outperformance requires
• Increasing scale and efficiency
• Leveraging technology
• Pushing the edge with innovation
Industry change due to
• Low interest rates and increased capital
• Growing protection gap
• More cost-conscious buyers
• Technology advancement and digitisation
Historical outperformance was driven by
• Active cycle management and capital deployment
Swiss Re Group | Company presentation | April 2020
CoreTraditional reinsurance
offerings
TransactionsTailored and structured
reinsurance
SolutionsAdditional value-adding
services
Competitive dynamics
How we win
Specialised with a few sophisticated competitors
Crowded and increasingly commoditised
Selected major competitors and non-traditional players
Brand & Reputation
Balance Sheet Strength
Scale & Presence
Joint Risk Sharing
Tech, innovation and R&D
Ability to Execute
32
We have developed a clear strategy to succeed in this environment
Swiss Re Group | Company presentation | April 2020
We aim to grow and balance our portfolios on multiple dimensions
2014 mid-term2018
Core
Transactions
Solutions
Core
Transactions
Solutions
Core
Transactions
Solutions
Illustrative
Property Casualty Specialty Life Health Property Casualty Specialty Life Health
AsiaEMEA
40% 20%40%
Americas AsiaEMEA
35% 35%30%
Americas
Property Casualty Specialty Life Health
AsiaEMEA
35% 35%30%
Americas
Breakdown by Core, Transactions and Solutions is based on EVM profit – new businessBreakdown by Region and Line of Business is based on EVM Capital – new business
33
Swiss Re Group | Company presentation | April 2020
Americas EMEA Asia
2010
12%
44%
2%
18%
16%
3%
1%
50%
19%
7%
25%
3%
2019
7.4
19.0
CAGR 11%
Property Nat Cat Casualty Specialty Life Health
Portfolio developments 2010-19
EVM premium (USD bn)
7.8 9%
16%10%
17%
24%
21%
12%
2010 2019
14%
24%
5%
39%
9%
18.4
CAGR 10%
6%
18%
2019
14%
27%9%
20%
12%
14%
2010
5%6%
22%
48%
3.3
13.6
CAGR 17% • Scale of the business
• Strong client access
• Diversification between P&C Re and L&H Re
• Risk knowledge
Core strengths
34
Reinsurance has significantly grown and diversified its portfolio, building on core strengths
Swiss Re Group | Company presentation | April 2020 35
Net income (USD m, LHS), Return on equity (%, RHS)
USD 16.1bnin 2018
USD 19.3bnin 2019
• Net impact of 2019 large nat cat events 3.5%pts above expectations. Unfavourable prior-year development impacted the combined ratio by 3.5%pts
• Strong increase in net premiums earned of 19.8% driven by profitable growth from large transactions and nat cat business in an improved market environment
• Underwriting margin affected by large losses from typhoons Hagibis and Faxai, Hurricane Dorian as well as wildfires, floods and hailstorms in Australia; additional current year impact from ADC with Corporate Solutions2. Adverse prior-year development from Typhoon Jebi and claims inflation in US casualty
• Investment margin improved from gains on sales of fixed income securities and market value gains on equity securities
• Decrease in expense margin due to higher revenues while managing expenses
7.810.7
2.9
-1.4
-6.4-5.5
3.8
2018 2019
4.3
-0.5pts
Operating expensesUnderwriting Investment
83.8 83.7
111.5
104.0107.8
201720152013 2014
85.7
93.5
2016 2018 2019
1 Net operating margin = EBIT / total revenues2 Note that since 2012 P&C Reinsurance has benefitted from positive development of Corporate Solutions reserves remaining in the
Reinsurance BU, and associated investment income
-413
26.0 26.7
22.4
16.4
-3.5
3.7 4.41 000
-1 000
3 000
0
2 000
4 000
25
5
10
-5
0
15
20
30
2018
3 228
20162013
3 564
2014
3 008
2015
2 100
2017
370 396
2019
Return on equityNet income
Combined ratio (%)Net premiums earned Net operating margin1 (%)
2019 P&C Reinsurance results impacted by large losses and adverse trends in US casualty
Swiss Re Group | Company presentation | April 2020
1 Price change defined as change in discounted premiums net of commissions / discounted expected claims; price change is adjusted for portfolio mix effects and loss assumptions
2 Assuming an average large loss burden and excluding prior-year reserve development3 Adjusted to exclude business now reported on a deposit accounted basis (premiums of ~USD 0.9bn)
36
Increase on renewable
0.4
Total renewable 1 January3
Cancelled
-1.1
Renewed& restructured
1.0
New business Estimated outcome3
9.8
8.2
10.0
+2%
% of total 100% -11% 89% +4% +10% 102%
USD bn
P&C Reinsurance renewals
• Volume up 2% YTD – driven by 14% growth in nat cat business
• 5% nominal price increases, excluding impact of interest rates and updated loss assumptions
• Price quality1 is flat overall: sufficient rate increases achieved to offset the negative impact of lower interest rates and higher loss assumptions
• Further price improvements expected in forthcoming renewals in 2020
• 2020 combined ratio estimate2
of 97%, reflecting price changes and scale effects
Price change1 +0%- Nominal price change +5%- Impact of lower interest rates -3.5%- Impact of higher loss assumptions -1.5%
Exposure change +2%
Solid volume growth at attractive price quality, leading to improvement in estimated combined ratio for 2020
Solid outcome of January renewals for P&C Reinsurance
Swiss Re Group | Company presentation | April 2020
P&C Reinsurance strategy in action
37
SOLUTIONS
TRANSACTIONS
COREUS GAAP operating expense ratio (%)
Economic profit (USD m)
• >170 transactions closed in 2019
• Transactions contributed ~20% to economic profit in 2019
• Operating leverage supported by 20% growth in earned premiums
• Efficiency gains across the value chain allow to invest in the future
6.9% 6.2%
2018 2019
-0.7%pts
• Innovative data analytics capability developed to model supply chain risk
• Launch of innovative telematics solution with Pioneer
• Solutions contributed ~7% to economic profit in 2019
Economic profit (USD m)
124184
2018 20191
+48%
1 EVM FY 2019 results to be published on 19 March 2020
421524
2018 20191
+24%
48%
32%
20%
37%
22%
19%
5%
7%
4%
3%
3%
Americas
Asia
EMEA
Property
Liability
Motor
Marine
Accident & health
Engineering
Credit & surety
Other specialty
Portfolio split by region and line of business (% of net premiums earned)
Swiss Re Group | Company presentation | April 2020
L&H Reinsurance continued to deliver strong results in 2019
38
Running yield and ROI (%)Net premiums earned
• Stable running yield. ROI supported by realised gains from fixed income securities and equity security market value gains
• Premiums earned increased slightly. Adjusted for an intra-group retrocession agreement with Life Capital and unfavourable fx movements, increase driven by Asian health business growth
• Underwriting result included a negative adjustment to the carrying value of an existing treaty following the acquisition of Quilter’s UK closed book business by ReAssure, reflecting the decrease in interest rates since treaty inception. Related to this adjustment, L&H Re rebalanced its asset portfolio, realising gains of a corresponding magnitude
11.4 12.3
3.3 2.7
-5.3 -5.0
20192018
9.4 10.0
+0.6pts
Underwriting Investment Operating expenses Net income (USD m, LHS), Return on equity (%, RHS)
420
-462
968 807 761 8996.4
-7.9
16.212.8
15.3
11.112.4
0
500
-1 000
0
-500
1 000
1 500
-10
-5
5
10
15
20
201620142013 2015
1 092
2017 2018 2019
Net income Return on equity
USD 12.7bnin 2018
USD 12.8bnin 2019
4.13.2 3.4 3.6
4.33.7
5.0
3.83.5 3.4 3.4
201720162013
3.5
2014 2015
3.3
2018
3.3
2019
Running yield ROI
Net operating margin1 (%)
1 Net operating margin = EBIT / (total revenues – net investment result unit linked & with profit)
Swiss Re Group | Company presentation | April 2020
L&H Reinsurance strategy in action
39
SOLUTIONS
TRANSACTIONS
CORE
• >30 transactions closed in 2019
• Transactions contributed ~30% to economic profit in 2019
• Higher result in 2018 driven by large deals in Asia
• Modest absolute reduction in expense base combined with slightly higher top line
43%
27%
30%
61%11%
12%
9%7%
Americas
EMEA
Asia
Medical
Mortality
Critical illness
Disability
Other593
495
2018 20191
-17%
US GAAP operating expense ratio (%)
Economic profit (USD m)
Portfolio split by region and line of business (% of net premiums earned)
1 EVM FY 2019 results to be published on 19 March 2020
Economic profit (USD m)
309 344
201912018
+11%
• Magnum Go bringing the benefits of automation and instant underwriting decisions to more clients
• In-force customer experience improving customer retention and consumer health through analytics and behavioural actions
• Solutions contributed ~20% to economic profit in 2019
6.0% 5.8%
2018 2019
-0.2%pts
Swiss Re Group | Company presentation | September 2018
Financial highlights
40
Corporate Solutions
Swiss Re Group | Company presentation | April 2020 41
Corporate Solutions remains key to Swiss Re’s differentiation strategy
Client Access
RiskKnowledge
CapitalStrength
Implement management actions
De-commoditise our core business
Grow with differentiating assets
Expand through tech-driven solutions
Swiss Re Group | Company presentation | April 2020 42
Focused value proposition in a large pool of commercial insurance risks
Our market presenceCommercial
insurance market
Large Corporates(turnover > USD 500m)
Mid Corporates(turnover >25m)
SMEs(turnover <25m)
Excess Layers: Top 5 – 10
International Programmes: Entering now
Primary Lead:Market entry in 2016
Bringing international programme capabilities where few others excel
Tackling complex risks with bespoke solutions
Providing innovative, efficient products which reduce costs for clients who do not want to pay for complexity
Serving only through innovative business models and joint ventures, e.g. Bradesco JV
Our proposition
SMEs:Only through JVe.g. Bradesco
Not targeted2010-19 commercial insurance market premiums CAGR, despite market softening
Excess Layers SMEs
Primary Lead
International Programmes Workers’ Compand Commercial Auto
SegmentationCorporate Solutions’ addressable market
Workers’ Comp andCommercial Auto:None
3%
Gross premiums written, 20191
40%
20%
40% USD ~300bn
14%
7%
14%
35%
30%
1 Source: Swiss Re Institute
USD ~800bn
Swiss Re Group | Company presentation | April 2020 43
~35%
Corporate Solutions portfolio
(USD 4.7bn GPWin 2018) Agriculture
Special Risks
Aerospace
Marine
Selected FinPro lines
US General Liability
Targeted portfolios (premiums) Pruning
>95%
~75%
>50%
~50%
~45%
~30%
Actions taken
Exit US E&S Casualty & reduce majority of Lead Umbrella
Reduce Financial Professional Healthcare exposure
Significantly reduce General Aviation & Space exposure
To be continued with new digital proposition
Significantly reduce exposure, excl. Brazil JV and Mexico
Significantly reduce Special Risks exposure
2018 reported CR: 137%
Decisive actions announced in H1 2019 to reinforce balance sheet
Reducing large limits & capacity deployed in targeted portfolios representing GPW of USD ~900m (~20% of premiums)
Swiss Re Group | Company presentation | April 2020 44
Combined ratio (%)Net premiums earned
• Profitability continued to be adversely impacted by underwriting performance, partially offset by income from investment activities and realised gains from insurance in derivative form
• 2019 adjusted2 combined ratio of 112%
Net income (USD m, LHS), Return on equity (%, RHS)
USD 3.9bnin 2018
USD 4.2bnin 2019
• Net premiums earned increased by 6.1% as rate increases and growth in selected lines of business more than offset active pruning of several portfolios
• Underwriting margin reflects reserve increases as well as high frequency and severity of large and medium-sized man-made losses, primarily in prior accident years
• Investment margin improved, bolstered by higher market value gains from equity securities and insurance in derivative form
• Expense margin slightly lower, benefitting from increased revenue, and despiteUSD 40m restructuring costs
95.1 93.0 93.2
101.1
133.4
117.5
127.9
20192014 20172013 20162015 2018
319 357
-741
-405
-647
9.6 12.515.5
6.0
-32.2
-19.4
-34.1 -40
-30
-20
-10
0
10
20
-800
-600
-400
-200
0
200
400
20162013
279
2014 20172015
135
2018 2019
Net income Return on equity
Net operating margin1 (%)
2019 Corporate Solutions results reflect decisive management actions
1 Net operating margin = EBIT / total revenues2 Reflecting impact of ADC premium and restructuring costs, assuming an average large nat cat loss burden and excluding prior-year
reserve development
5.48.7
-8.1
-18.4
-17.3
-11.1
1.9
2018 2019
-16.7
-5.6%pts
Underwriting Investment Operating expenses
Swiss Re Group | Company presentation | April 2020 45
Gross premiums written of USD 231m of planned pruning activities executed in 2019, predominantly in US general liability. Majority of pruning activity takes place in 2020 with ~90% of pruning objective to be achieved by end of 2020
Portfolio pruning
Operating expense savings
Decisive actions taken in 2019, with the majority of the savings realised in 2020. On track to achieve gross expense savings in excess of USD 100m in 2021
Rate increases
12% price increases achieved in 2019. Strong momentum continued in January 2020. Strongest increases in loss-affected property lines. Specialty correcting but changes vary between sub-lines
Update on Corporate Solutions 2019 management actions
Growth in selected target areas 2019
ADC with P&C Re and additional reinsurance protectionImproved reinsurance structure
Pruning actions in targeted portfolios 2019 (USD 231m)
Special risks
US general liability
Marine
Aerospace
Agriculture
Selected FinPro lines
2019 pruning actions
Pronounced increase in severity and frequency of US casualty claims. H1 reserve increase and further strengthening in H2 including higher initial loss picks
Claims developments and reserving actions
Accident & health
Property
Credit & surety
Engineering
2019 premium change
Swiss Re Group | Company presentation | April 2020
• Higher normalised 2019 combined ratio (adj. for ADC premium and restructuring costs) vs. 2018 explained by higher initial loss picks and increase in small to medium-sized losses
• Strong rate momentum in 2019 to be partly earned through in 2020
• 65% of the portfolio pruning to be executed in 2020
• No change to the combined ratio target2 of 98% for 2021
Expected combined ratio development
1 Large nat cat below expectations and prior-year reserve development2 Assuming an average large nat cat loss burden and excluding prior-year reserve development
Net expense savings
Rate increases
~1%pt
2019 reported
combined ratio
2020 estimate2
115%
Normali-sation1
112%
128%
Portfolio pruning
Adjusted reinsurance
structure
Normalised 2019
combined ratio
105%
Restruct-uringcosts
Normalised 2019
combined ratio, adjusted
~1%pt
Impact ADC premium
~13%pts
~2%pts
~2%pts
~4%pts
~0%pts
Path to Corporate Solutions 2020 combined ratio of 105%
46
Swiss Re Group | Company presentation | September 2018
Financial highlights
47
Life Capital
Swiss Re Group | Company presentation | April 2020 48
Focus on dynamically growing B2B2C businesses
GBP 1.2bncash proceeds
to Swiss Re
1 Subject to obtaining the required regulatory and anti-trust approvals2 Expected to be accounted for at fair value with movements in the Phoenix share price reflected in Swiss Re’s income statement3 Ultimate impact subject to movements in the Phoenix share price until closing
ReAssure sale expected to close mid-20201
GBP 3.25bntransaction valuation
• 13-17% stake in Phoenix post-closing2
• Economic profit3 and benefit to Group SST ratio of 12%pts expected at closing
+22%Open book GPW growth in 2019
• Further expansion in 2019
• New KPIs to be communicated mid-2020
Strategic milestone achieved with agreement to sell ReAssure, improving the Group’s return on capital profile
Swiss Re Group | Company presentation | April 2020
Title to go here two lines maximumiptiQ is our state-of-the-art digital white labelling B2B2C insurance platform
Client Access
RiskKnowledge
CapitalStrength
TravelCyber
MobilityHome
P&CL&H
Term & Whole LifeAccident
Critical IllnessHealth Add-Ons
28 partners Geographic reach
Key capabilities
60-day partner onboardingMulti-channel
End-to-end platformData-driven customer insights
Products
InsurersInsurance intermediaries
BanksEcosystems
Current footprint
Expansion opportunity
49
Leveraging Swiss Re’s differentiation drivers
Swiss Re Group | Company presentation | April 2020 50
iptiQ businesses are growing dynamically, with significant expansion opportunities
1 Core business only2 2019 projected
61
89
225
2017 2018 20192
25
71
2017 2018
~155
20192
Gross premiums written (GPW)1 Annualised new business premium (APN)1
USD m USD m
…leads to
~USD 1.0bn GPWin 10 years, at current sales levels
~USD 155m APNin biometric L&H risks vs. USD 200-300m for
UK’s largest provider of L&H protection products
CAGR +149%
CAGR +92%
Swiss Re Group | Company presentation | April 2020
We incubate and operate dynamically growing start-up businesses…
Financial returns profile
US GAAP and EVM returns profile – experience-based / illustrative
• High upfront investments in build and growth
• Businesses need scale to achieve profitability
• Economic profit break-even is achieved more quickly than US GAAP
• Significant Economic Net Worth of ~USD 600m for iptiQ projected for year-end 2019
• Experience from incubating start-up business with accelerated time to launch down to 10 months with mature platform and resources
Scale-up & break-even
Build & incubate
Steady state at target ROE
L&H EMEA ANZ
0 – 5 years 5 – 8 years 8+ years
L&H USP&C
Economic earnings profile
US GAAP earnings profile
Maturity profile
Estimated break-even Estimated break-even
51
Swiss Re Group | Company presentation | April 2020
1 Normalised EVM figures and multiples reflect impact of USD 100m p.a. costs invested to build the platform and sub-scale overrun costs above modelled expenses2 2019 projected3 Multiples used are based on peer comparison and observable metrics for similar high growth companies
…which increase Swiss Re’s economic value
Estimating the current value of iptiQ, as applied to…
USD 225m 20192 GPW
~5-7xP/GPW multiple3
~USD 1-1.5 bnTotal value
~USD 50m Normalised 20191 EVM
new business profit
~10-15xVNB multiplier3
~1.0xENW multiplier
~USD 600m20192 ENW
+
I
II
…high growth insurance companiesbased on equity and value of new business1
…InsurTech start-upsbased on gross premiums written
52
Swiss Re Group | Company presentation | September 2018
Financial highlights
53
Asset Management
Swiss Re Group | Company presentation | April 2020
Asset Management is a key contributor to the Group’s value proposition
54
Flexible investment platform
Attractive returns
Long-term, sustainable returns
Average yearly pre-tax contribution of
USD 4.3bnto Swiss Re Group’s US GAAP results from
2015-2019
Leverage tech and advanced analytics
Strategic Asset Allocation
Target Liability Portfolio
Risk analytics
Bigdata
Scenario modelling
Industry-leading ESG approach
~100%assets considering ESG criteria
Systematic integration of ESG considerations
Financial markets expertise
Centre of excellence for the Group
Managing market risk… …to support our business
Swiss Re Group | Company presentation | April 2020
Cash and cash equivalents6%
Short-term investments4%
Government bonds 42%
Credit bonds34%
Equities 5%
Mortgages and other loans3%
Other investments (incl. policy loans)
6%
Overall investment portfolio
USD bn
EndFY 2019
Balance sheet values 179.9
Unit-linked investments -40.2
With-profit business -5.2
Assets for own account(on balance sheet only)
134.5
USD bn P&C Re L&H ReCorporate Solutions
Life Capital Group items Consolidation
EndFY 2019
EndFY 2018
Cash and cash equivalents 3.7 1.7 1.7 1.5 - - 8.6 4.8Short-term investments 3.3 1.7 0.4 0.5 - - 5.9 5.4Government bonds 30.3 14.3 5.3 6.5 - - 56.4 50.9Credit bonds 8.6 17.7 2.2 17.0 0.1 - 45.6 45.1Equities1 3.3 0.7 0.1 0.1 2.1 - 6.3 6.3Mortgages and other loans 6.8 3.5 - 2.2 3.0 -11.1 4.4 4.5Other investments (incl. policy loans) 6.2 1.3 0.2 0.9 0.4 -1.7 7.3 5.6Total 62.2 40.9 9.9 28.7 5.6 -12.8 134.5 122.6
1 Includes equity securities, private equity and Principal InvestmentsNote: Balance sheet values include ReAssure investments classified as Assets Held for Sale as of 31 December 2019. Included in Assets for own account are USD 23.9bn of ReAssure investments
55
Swiss Re Group | Company presentation | April 2020
42%
19%
6%5%
4%
4%
3%
2%1%
14%
United States United KingdomGermany FranceCanada JapanAustralia ChinaNetherlands ROW
45%
31%
9%
7%
4%4%
BBB A AAA AA <BBB NR
56
• Increase in government bonds driven by net purchases and market value gains stemming from declining interest rates as well as favourable fx impact
• Credit bonds include corporate bonds (USD 41.0bn) and securitised products (USD 4.6bn)
• Increase in credit bonds driven by market value gains and favourable fx impacts, largely offset by net sales
USD mGovernment
bondsCredit bonds
EndFY 2018 50 876 45 076
EndFY 2019 56 399 45 624
Fixed income securities
Note: Includes ReAssure investments in Life Capital classified as assets held for sale as of 31 December 2019
Swiss Re Group | Company presentation | April 2020
Equities and alternative investments
39%
26%
18%
16%1%
Real estateby geography
SwitzerlandUSOther DirectGermanyIndirect
• Decrease in equity securities driven by net sales, mostly offset by market value gains
• Increase in private equity mainly driven by net purchases
• Increase in real estate driven by net purchases and market value gains
• Decrease in Principal Investments driven by the sale of SulAmérica, partially offset by market value gains
32%
16%15%
11%
9%
6%3%
2%2% 2%
Equity securitiesby sector
Exchange-traded funds
Non-Cyclical Consumer Goods
Financials
Information Technology
Cyclical Services
General Industrials
Basic Industries
Cyclical Consumer Goods
Resources
Utilities
Non-Cyclical Services
69%
15%
10%6%
Principal Investmentsby sector
HGM Insurance
PE Funds
Developed Market Insurance
Non Insurance
57
USD mEnd
FY 2018End
FY 2019
Equity securities 2 695 2 599
Private equity 1 463 1 626
Hedge funds 327 352
Real estate 4 430 4 802
Principal Investments 2 109 2 068
Equity securities 341 394
Private equity 1 768 1 674
Total market value 11 024 11 447
1%
Note: Includes ReAssure investments in Life Capital classified as assets held for sale as of 31 December 2019
Swiss Re Group | Company presentation | April 2020 58
• ROI driven by net investment income (3.0%) and net realised gains (1.7%)
• Net realised gains of USD 2.0bn due to fixed income sales and equity market performance
• Very low impairments of USD 5m
• Stable running yield, moderately impacted by the low interest rate environment
• Net investment income above prior year, mainly due to the sale of SulAmérica
• Industry-leading ESG approach with ~100% of invested assets following ESG benchmarks
• Asset allocation changes were minimal on a relative basis
• Increase in credit investments due to declining interest rates and credit spread tightening, partly offset by net sales
• Increase in equities reflect market value gains, partially offset by the sale of SulAmérica
Return on investments (ROI) Investment portfolio positioning (USD bn)
51.1 52.1
49.3 54.4
10.214.5
40
0
20
120
60
80
100
140
1.0
122.6
End FY 2018
0.9
End FY 2019
133.4
Net investment income (USD m, LHS) Running yield (%, RHS)
Equities and alternatives (incl. Principal Investments)
Cash and short-term investments
Credit investments
Government bonds
Other
2.8%in 2018
4.7%in 2019
577598
313301 367
504 682
3.23.3
3.02.9 2.9 2.9
2.8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1 000
5 000
3 000
0
4 000
2 000
2 601 2 798
2013
2 788
2014
2 547
20182015 2016
2 765
2017
2 892 2 885
2019
Running yield Other NII (incl. expenses)Running yield NII
Group investments delivered excellent value in 2019, driven by a high quality investment portfolio
11.511.5
Swiss Re Group | Company presentation | April 2020 59
• Stable running yield (FY 2019: 2.8%) despite headwinds from declining yields driven by portfolio concentration in higher-income, longer-maturity securities (92% of fixed income unrealised gains are on securities with >5 years in maturity)
• Low interest rates will continue to put pressure on the running yield mainly through a higher market value of the asset base. As a counterbalance, the Group will continue to broaden its investment portfolio across asset classes (including real assets and private debt)
Higher yields concentrated in longer-maturity securities (FY 2019)
90
105
30
0
15
45
75
60
0.0%
1.0%
2.0%
3.0%
4.0%
Running
yield
2.8%
Less than five years
Greater thanfive years/non-fixed
Average invested assets (RHS, USD bn)Running yield (LHS)
2.9%
Investment portfolio well positioned to deliver consistent returns
2.7%
Swiss Re Group | Company presentation | April 2020
Sources: Barclays, Swiss Re
ESG makes economic sense: better risk-adjusted return
0.81
0.88
0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90
US Corp Int. (Traditional) Sustainability US Corp Int. (ESG BB+)
Enhancement Inclusion Exclusion
ESG benchmarksand criteria
Thematic investments
Sustainability risk assessments
Information ratio (risk-adjusted return)from end May 2014 to end December 2019
• ~100% of assets considering ESG criteria
• Swiss Re selected to the 2019 PRI Leaders’ Group
Key 2019 highlights
• 2019 green, social and sustainability bonds of USD 1.9bn
• New 2024 target of USD 4bn
• New absolute threshold for mining companies and power utility generators
Swiss Re’s industry-leading approach to responsible investing
60
Systematic integration of ESG criteria into investment process and portfolio
Swiss Re Group | Company presentation | September 2018
Financial highlights
61
Global Re/Insurance & Protection Gap
Swiss Re Group | Company presentation | April 2020
Global cat losses totaled USD 146 billion in 2019, and 59% was uninsured
62Source: Swiss Re Institute
Swiss Re Group | Company presentation | April 2020
0
50
100
150
200
250
300
350
400
450
500
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Insured losses Uninsured losses 10-year moving average insured losses 10-year moving average total economic losses
Disaster losses still mostly uninsured
Source: Swiss Re Institute
Economic losses =
insured + uninsured
losses
63
Swiss Re Group | Company presentation | April 2020
Insured losses in 2019: USD 60 billion
Source: Swiss Re Institute
Insured losses, 1970-2019 (USD bn at 2019 prices)
64
0
20
40
60
80
100
120
140
160
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Earthquake/tsunami Weather-related catastrophes Man-made disasters
Hurricane Andrew
HurricanesKatrina, Rita, Wilma
WTC
HurricaneSandy
Winter Storm Lothar
Hurricanes Ivan,Charley, Frances
HurricanesIke, Gustav
HurricanesHarvey, Irma, Japan, NZ
earthquakes, Thailand flood
Camp Fire, Typhoon
Jebi
Typhoons Hagibis,
Faxai
2019
Swiss Re Group | Company presentation | April 2020
Switzerland
Ireland
United States
Germany
United KingdomItaly
Spain
Portugal
Greece
India
South Africa
Angola
Morocco
EgyptNigeria
Ghana
Kenya
Cote d Ivoire
Ethiopia
Mozambique
0%
1%
2%
3%
4%
0.1 1 10 100
Average advanced markets
Average emerging markets
GDP per capita, 1000 USD
Source: Swiss Re Institute, S-Curve in non-life insurance 2018
• Swiss Re’s developed insurance “S-Curve” illustrates the various stages of insurance penetration
• Insurance penetration rises most sharply in middle-income countries
• With our focus on High Growth Markets, Swiss Re is well positioned to benefit from this trend
65
Direct premiums as a % of GDP, 2018
Swiss Re Group | Company presentation | April 2020 66
Nat CatExpected annual loss from storms, earthquakes and
floods
Estimated insurance coverage for primary nat
cat perilsUSD 222bn 24%
Mortality Income needed to maintain survivors’ living standards
Life insurance, financial assets, social security USD 386bn 45%
Health Total healthcare expenditure (funded)
Total healthcare expenditures minus
households’ stressful out-of-pocket expenses
USD 616bn 93%
Composite -- -- USD 1.2trn 54%
Source: Swiss Re Institute
Note: All figures for 2018 and global; Protection gap is in premium equivalent terms
Need (N) Available (A)Protection Gap
(N – A)Insurance Resilience
Index (A ÷ N)
Swiss Re Group | Company presentation | April 2020 67Source: Swiss Re Institute
>1trn
60-80 bn profit potential
additional claim payments
Untapped resilience opportunity = New risk pools
175
91 9173
45 34
98
208
159
116 103
115
68
456
0
100
200
300
400
US &Canada
EMEAadvanced
Asia-Pacificadvanced
LatinAmerica andCaribbean
Middle Eastand Africa
EmergingEurope andCentral Asia
Asia-Pacificemerging
Advanced markets Emerging markets
US
D b
n
2000 2018
Protection gap in advanced and emerging economies
+27% of current profit pools
Swiss Re Group | Company presentation | April 2020
Swiss Re Public Sector Solutions enables the Group to broaden our client base and address the protection gap
Agriculture
Drought
Hurricane
Flood
Earthquake
Health
UruguayEnergy production shortfalls
due to drought
GuatemalaNat cat business interruption risk
CaribbeanHurricane, earthquake and excess rainfall risk
Pacific Alliance(CHL, COL, MEX, PER)
Earthquake risk
United StatesFlood risk
MexicoEarthquake/hurricane
and livestock risk
California/UtahEarthquake risk
Louisiana Hurricane risk
TurkeyEarthquake
pool
BangladeshFlood insurance
United KingdomFlood risk
FloridaHurricane risk
IndiaWeather insurance
for farmers
African Risk Capacity
Government drought insurance pool
ThailandCrop
insurance
KenyaLivestock insurance
Pacific Islands Earthquake and tropical cyclone risk
PhilippinesEarthquake and tropical cyclone risk
Guangdong Typhoon/rainfall
BeijingAgricultural risk
VietnamAgriculture yield cover
Heilongjiang Multiperil disaster risk
EgyptHospital cash
Mesoamerican Coral ReefProtection of reef damage
following a storm
• 1st team in the reinsurance industry to be fully dedicated to the public sector
• +570 bound transactions since 2011 demonstrate the need for the covers we offer
• Global footprint providing tailored support to the specific needs of our public sector clients
• Always at the forefront, we are a pioneer in emerging and industrialized markets
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Swiss Re Group | Company presentation | April 2020 691 Task Force for Climate-related Financial Disclosures
Find out more:
Swiss Re’s 2019 Sustainability Report TCFD1 disclosures in Swiss Re’sAnnual Report
What lies ahead:
Sustainability in underwritingFurther integrate sustainability into business propositions
Sustainability RisksRevise Sustainability Business Risk FrameworkDevelop carbon steering mechanisms
Responsible InvestingFurther quantify, manage and reduce investment exposure to climate risk
Targets and metricsProgress on net-zero CO2 ambitions (operations by 2030, Asset and Liability side by 2050)Increasingly measure and quantify sustainability performance
Swiss Re Group | Company presentation | April 2020
Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans, objectives, targets, and trends) and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact.
Forward-looking statements typically are identified by words or phrases such as “anticipate”, “assume”, “believe”, “continue”, “estimate”, “expect”, “foresee”, “intend”, “may increase”, “may fluctuate” and similar expressions, or by future or conditional verbs such as “will”, “should”, “would” and “could”. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Group’s actual results of operations, financial condition, solvency ratios, capital or liquidity positions or prospects to be materially different from any future results of operations, financial condition, solvency ratios, capital or liquidity positions or prospects expressed or implied by such statements or cause Swiss Re to not achieve its published targets. Such factors include, among others:
• the frequency, severity and development of insured claim events, particularly natural catastrophes, man-made disasters, pandemics, acts of terrorism or acts of war;
• mortality, morbidity and longevity experience;
• the cyclicality of the reinsurance sector;
• central bank intervention in the financial markets, trade wars or other protectionist measures relating to international trade arrangements, adverse geopolitical events, domestic political upheavals or other developments that adversely impact global economic conditions;
• increased volatility of, and/or disruption in, global capital and credit markets;
• the Group’s ability to maintain sufficient liquidity and access to capital markets, including sufficient liquidity to cover potential recapture of reinsurance agreements, early calls of debt or debt-like arrangements and collateral calls due to actual or perceived deterioration of the Group’s financial strength or otherwise;
• the Group’s inability to realize amounts on sales of securities on the Group’s balance sheet equivalent to their values recorded for accounting purposes;
• the Group’s inability to generate sufficient investment income from its investment portfolio, including as a result of fluctuations in the equity and fixed income markets, the composition of the investment portfolio or otherwise;
• changes in legislation and regulation, or the interpretations thereof by regulators and courts, affecting the Group or its ceding companies, including as a result of comprehensive reform or shifts away from multilateral approaches to regulation of global operations;
• the lowering or loss of one of the financial strength or other ratings of one or more companies in the Group, and developments adversely affecting its ability to achieve improved ratings;
• uncertainties in estimating reserves, including differences between actual claims experience and underwriting and reserving assumptions;
• policy renewal and lapse rates;
• uncertainties in estimating future claims for purposes of financial reporting, particularly with respect to large natural catastrophes and certain large man-made losses, as significant uncertainties may be involved in estimating losses from such events and preliminary estimates may be subject to change as new information becomes available;
• legal actions or regulatory investigations or actions, including in respect of industry requirements or business conduct rules of general applicability;
• the outcome of tax audits, the ability to realize tax loss carryforwards and the ability to realize deferred tax assets (including by reason of the mix of earnings in a jurisdiction or deemed change of control), which could negatively impact future earnings, and the overall impact of changes in tax regimes on the Group’s business model;
• changes in accounting estimates or assumptions that affect reported amounts of assets, liabilities, revenues or expenses, including contingent assets and liabilities;
• changes in accounting standards, practices or policies;
• strengthening or weakening of foreign currencies;
• reforms of, or other potential changes to, benchmark reference rates;
• failure of the Group’s hedging arrangements to be effective;
• significant investments, acquisitions or dispositions, and any delays, unforeseen liabilities or other costs, lower-than-expected benefits, impairments, ratings action or other issues experienced in connection with any such transactions;
• extraordinary events affecting the Group’s clients and other counterparties, such as bankruptcies, liquidations and other credit-related events;
• changing levels of competition;
• the effects of business disruption due to terrorist attacks, cyberattacks, natural catastrophes, public health emergencies, hostilities or other events;
• limitations on the ability of the Group’s subsidiaries to pay dividends or make other distributions; and
• operational factors, including the efficacy of risk management and other internal procedures in anticipating and managing the foregoing risks.
These factors are not exhaustive. Swiss Re operates in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. Swiss Re undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
This communication is not intended to be a recommendation to buy, sell or hold securities and does not constitute an offer for the sale of, or the solicitation of an offer to buy, securities in any jurisdiction, including the United States. Any such offer will only be made by means of a prospectus or offering memorandum, and in compliance with applicable securities laws.
Cautionary note on forward-looking statements
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Swiss Re Group | Company presentation | April 2020
Investor Relations contacts
Hotline E-mail+41 43 285 4444 [email protected]
Philippe Brahin Daniel Bischof Deborah Gillott+41 43 285 7212 +41 43 285 46 35 +41 43 285 25 15
Olivia Brindle Marcel Fuchs Zuzanna Prabucka+41 43 285 64 37 +41 43 285 36 11 +41 43 285 48 56
Corporate calendar & contacts
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Corporate calendar
202031 July H1 2020 Results Conference call30 October 9M 2020 Key Financial Data Conference call
Swiss Re Group | Company presentation | April 2020 72
Swiss Re Group | Company presentation | April 2020
Legal notice
©2020 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivative works of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re.The information and opinions contained in the presentation are provided as at the date of the presentation and are subject to change without notice. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage or loss resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial or consequential loss relating to this presentation.
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